In the Goods and Services Tax (GST) framework, “time of supply” is a crucial concept because it determines the exact point in time when the liability to pay GST arises.

For services, this is governed by Section 13 of the Central Goods and Services Tax (CGST) Act, 2017. Correctly determining the time of supply is essential for:

• Calculating the correct GST rate applicable.
• Avoiding interest, penalties, or disputes with tax authorities.
• Ensuring compliance with invoicing and payment rules.

Section 13 covers different scenarios for determining the time of supply of services, including:

• Normal forward charge
• Reverse charge mechanism (RCM)
• Vouchers
• Cases where determination is not possible by standard rules
• Additions like interest, late fee, or penalty

The provisions have been amended through various Finance Acts and Notifications, the latest being the Finance Act, 2024 (effective 1st November 2024), which introduced new rules for RCM in certain cases.

Forward charge (normal supply) — the order to check

Under Section 13(2), the TOS is the earliest of:
a) Date of issue of invoice by supplier, if invoice is issued within the time permitted under Section 31 (see Step 3).
b) Date of receipt of payment, which for TOS means the earlier of (i) date entered in supplier’s books, or (ii) date credited to supplier’s bank account.

31. c) Date of provision of service, but only if invoice was not issued within the time limit under Section 31.
    d) If none of the above apply, date on which recipient shows receipt of service in his books.

Key points and practical tips:

• “Date of receipt of payment” is strictly defined — even if the bank credit comes later, if the supplier records an advance received in books earlier, that earlier book entry triggers TOS. Always reconcile bank and books.
• Which wins: if invoice is timely and payment was earlier, the earlier of those two is the TOS (often payment if advance is received). Example below.

Invoice timing and Section 31 (when is an invoice “timely”?)

• The ability to use invoice date in Section 13(2)(a) depends on whether the invoice was issued within the period prescribed under Section 31 (and relevant rules). For services, the usual time limit is 30 days from provision of service (exceptions: banks/insurance/NBFC may be 45 days; see the invoicing handbook and Rule 47). If invoice is late (beyond Section 31 period), the invoice date loses priority and TOS may fall on payment or provision date.

Practical note:

• For continuous supplies (see Step 7) Section 31 contains special invoicing rules — invoice may be required on or before due date of payment.

Reverse Charge Mechanism (RCM) — order and recent change

For supplies on which tax is paid or payable on RCM, Section 13(3) sets the earlier of:
a) Date of payment as entered in recipient’s books or date debited in recipient’s bank account — whichever is earlier.
b) Date immediately following sixty days from the date of issue of invoice by the supplier (i.e., effectively the 61st day after invoice).
c) Date of issue of invoice by the recipient, in cases where the recipient is required to issue the invoice (this clause was inserted w.e.f. 1-Nov-2024 by the Finance (No. 2) Act / related rules).
If neither (a), (b) nor (c) is determinable, the TOS is the date of entry in the recipient’s books. Also note special rule for supplies from associated enterprises located outside India (TOS is earlier of recipient’s book entry or date of payment).

Example (RCM):

• Supplier issues invoice on 1 May 2025; recipient pays on 30 June 2025 (and records on same day). Which is TOS? Compare: payment date (30 June) vs 61st day after invoice (31 July) → 30 June 2025 is earlier, so TOS = 30 June.

Important compliance implication:

• Under the 1-Nov-2024 changes, where the recipient must self-invoice, failure to issue that recipient invoice on time can affect the date for ITC and the return in which the recipient must discharge the liability. See the rule insertion (Rule 47A) and notifications effective 1-Nov-2024.

Supply of vouchers (Section 13(4))

• If the supply is identifiable at voucher-issue (single-purpose voucher, SPV), TOS = date of issue of voucher.
• If not identifiable at issue (general-purpose voucher, GPV), TOS = date of voucher redemption.
  This distinction is important for pre-paid schemes, gift cards, etc. The GST Council flyer gives user-friendly examples.

Residual rules (Section 13(5))

If none of the above methods yield a TOS:

• (a) If the taxpayer must file a periodic return, then TOS = date on which such return is to be filed (i.e., the return due date for that period).
• (b) Otherwise, TOS = date on which the tax is paid.
  These are fall-back rules to ensure there’s always a determinable tax period

Continuous supply of services — special rules (contracts with periodic payments)

Definition & when it applies:

• “Continuous supply of services” generally means a supply provided or agreed to be provided continuously or on a recurring basis under a contract for a period exceeding three months, with periodic payment obligations. For such supplies, invoicing must follow the contract’s schedule:
  1. If due date of payment is ascertainable from contract → issue invoice on or before the due date of payment.
  2. If due date not ascertainable → issue invoice on/before receipt of payment.
  3. If payment linked to completion of an event → issue invoice on/before completion date of that event.

Practical tip:

• For recurring services (software subscriptions, maintenance contracts, telecom), define billing cycles clearly in the contract and align invoices to payment due dates to avoid ambiguity on TOS.

Interest, Late Fee, or Penalty – Section 13(6)

Any addition to the value of supply due to interest, late fee, or penalty for delayed payment:

• Time of supply = Date on which the supplier receives such amount

Cross-border / associated enterprise situations

If supplier is outside India and is an associated enterprise, the TOS (for that portion) is the earlier of the date of entry in the recipient’s books or the date of payment. This is to avoid uncertainty where bank credit or invoice timing is ambiguous.